The Senate Finance Committee unanimously voted Wednesday to restore the $52 million that the state House wants to raid from the Renewable Energy Fund. But even if the full Senates votes to restore those funds next week, it does not mean that the raid won’t happen.

“The real question is what sources of funds is the Senate going to draw upon to put that money back,” said House Finance Committee Chair Neal Kurk, R-Weare. “It’s great if there were enough money not to dip into that fund, as well as cut back on a number of different things, but where is the money going to come from?”

The Senate vote came after an intense lobby campaign by members of the renewable energy industry that could be hurt by the raid, which offers rebates for residents and business that install things like roof top solar energy, or wood pellet boilers. The money from the fund comes from utilities that don’t meet the state’s increasingly stringent Renewable Energy Portfolio Standard – requiring 25 percent of energy to be renewables by 2025.

Yet the amount those funds will raise is an estimate – some say an optimistic estimate – so it is unclear whether the state would get the full $52 million, even if it did raid the funds. And opponents of the raid contend that using utility money amounted to taxing ratepayers to balance the budget. The NH Business and Industry Association testified against it because they oppose raiding dedicated funds

The Senate leadership has already stated their reluctance to using dedicated funds to balance the budget, but so had the House, so Wednesday’s vote, while expected, was not a foregone conclusion.

“We are working hard to make sure dedicated funds, like the Renewable Energy Fund, are restored or maintained at a consistent level,” said Senate Finance Chair Jeanie Forrester (R- Meredith) in a press release after the vote.

“We have heard from numerous small business owners in the energy industry that the Renewable Energy Fund serves an important role in their ability to be successful in the state,” added Senate Finance Vice-Chair Jerry Little (R-Weare), who also serves on the Energy and Natural Resources Committee.

The NH Clean Tech Council applauded the vote as “a great step forward toward ensuring the intended use of these critical funds: namely to enable businesses, towns and citizens to lower their energy costs, lower local taxes and keep our energy dollars here in New Hampshire,” said Executive Director Kate Epsen.

But she told NH Business Review that the group continues to “watch the process to the very end.” Her members plan to lobby senators throughout the week, and then shift to the House after that, as the budget goes to a committee of conference.

When asked about where the money would come from to balance the budget, she said, “I am not going to tell members of the House how to do their job, but they’ve come up with “revenue sources” (taxpayers) before without using dedicated funds. It has been done before.”

Renewable electricity mandates are laws that require utilities to sell or produce a certain percentage of electricity from renewable sources. Usually the required percentage of renewable electricity increases over time until reaching a target percentage, such as 20 or 25 percent, at a target year, such as 2020 or 2025. Twenty-nine states have renewable electricity mandates, an additional six states have renewable electricity goals, and West Virginia has an alternative energy mandate. There is no a federal mandate at present, although some members of Congress (both Republicans and Democrats) have supported one.

For the past few years, Congress has considered a nationwide renewable electricity mandate, and renewable energy lobbyists have recently been increasing pressure on Capitol Hill to consider a renewable electricity mandate in the 112th Congress. One missing and important piece of this discussion is the experience of the States that have tried renewable electricity mandates.

Renewable Mandates Are Customized

The State mandates differ significantly from each other as well as from federal mandate proposals with respect to sources that count as “renewable” (for example, Pennsylvania’s mandate counts coalbed methane, New York’s counts automobile tires), timetables, and enforcement mechanisms.

The percentages and timetables range from 1 percent by 2010 (for customers of cooperative and municipal suppliers in Colorado) to 33 percent by 2020 (for all ratepayers in California). The enforcement mechanisms range from none (in most places) to $600/MWh for missing the solar component of the mandate (in sunny Massachusetts).
In short, those States that have mandates have tailored them very specifically to the resources, needs, and tolerances of the particular State.

Renewable Mandates Cost Consumers Money

Electricity prices are already nearly 40 percent higher in States with renewable electricity mandates. While the renewable mandates may not be the only reason electricity prices are higher in those States, these mandates likely contribute to higher prices and certainly are not helping to decrease the price. After all, renewable electricity mandates require the generation of electricity from more expensive sources. Typically, too, they require backup generation, as well
as backup capacity, and they typically place stress on transmission-grid operations (owing to their stochastic nature). As states increase their use of renewable sources, it is therefore likely that the price of electricity in states with mandates will increase even more.

Renewable Electricity Mandates Are an Expensive Way to Reduce Carbon Dioxide Emissions

Some argue that renewable electricity mandates are a good way to reduce carbon dioxide emissions, but renewable electricity mandates are a very expensive way to reduce carbon dioxide emissions. According to the California Air Resources Board, it costs $133 per ton to reduce carbon emissions through the mechanism of a renewable electricity mandate. An internal Obama administration memorandum on subsidies for renewables recently noted that carbon dioxide emissions “would have to be valued at nearly $130 per ton for CO2 for the climate benefits to equal the subsidies.” To put these numbers in perspective, it currently costs about $15 a ton to purchase a certified carbon dioxide allowance traded on the European Climate Exchange.

A Federal Renewable Electricity Mandate Would Be Costly

The Heritage Foundation recently calculated the economic impact of a federal renewable electricity mandate. Its researchers found that a mandate starting at 3 percent for 2012, and increasing by 1.5 percent per year until 2035, would:

• Raise electricity prices by 36 percent for households and 60 percent for industry;
• Cut national income (GDP) by $5.2 trillion between 2012 and 2035;
• Cut national income by $2,400 per year for a family of four;
• Reduce employment by more than 1,000,000 jobs; and
• Add more than $10,000 to a family of four’s share of the national debt by 2035.

The California Air Resources Board has estimated that it will cost $115 billion in new infrastructure to meet California’s renewable electricity mandate in 2020 (33 percent).

Renewable Subsidies Kill Jobs

One argument people use to promote renewable electricity mandates is that the mandates can create “green jobs.” But trying to create jobs through renewable subsidies has proved to be a failure. In Spain, for example, it is estimated that 2.2 jobs were lost as an opportunity cost of creating one expensive, subsidy- and set-aside-dependent job in the renewable sector. In Germany, per worker subsidies in the solar industry are as high as $240,000 per worker. The situation in Denmark is similar. Danes have to pay the highest electricity prices in the European Union, and they pay subsidies of nearly $400 million a year to wind producers (in a country with less than 2 percent of the population of the United States).